Highlights:
- Nifty 50 and Sensex retreat after touching fresh highs
- IT stocks fall ahead of quarterly earnings season
- US tariff threats linked to Russian oil imports weigh on sentiment
- HDFC Bank drops after mixed December-quarter business update
- Select mid- and small-cap stocks gain on strong results
Indian equity benchmarks closed lower on Monday (5) after paring early gains, as weakness in information technology stocks and renewed concerns over US trade policy offset positive corporate developments that had fueled optimism in recent sessions.
The Nifty 50 slipped 0.30 per cent to end at 26,250.3, while the Sensex declined 0.38 per cent to close at 85,439.62. Earlier in the day, the Nifty had risen as much as 0.17 per cent to a record high of 26,373.20 before reversing course. Both indexes had advanced about 1.5 per cent over the previous three sessions, with the Nifty repeatedly scaling new peaks.
Market sentiment was dampened by losses in IT stocks, which fell 1.4 per cent as a sector. Indian IT firms derive a significant portion of their revenue from the United States, making them sensitive to global demand trends and trade developments. The decline came ahead of the sector’s quarterly earnings season, which begins next week. Citi Research said the recovery in IT spending is likely to be slow and uneven.
HCLTech fell 2.2 per cent, while Tech Mahindra lost about 1 per cent, after brokerage CLSA downgraded both stocks, adding to pressure on the sector.
Trade concerns also resurfaced after US President Donald Trump said tariffs on India could be raised if New Delhi does not meet Washington’s demands to curb purchases of Russian oil. The United States has already imposed tariffs of up to 50 per cent on Indian goods, with half of that amount introduced as a punitive measure tied to India’s imports of Russian crude. Investors worried that further escalation could hurt export-oriented sectors.
Globally, Asian markets traded higher, and oil prices declined as investors assessed the implications of recent US military action in Venezuela. However, back in India, geopolitical tensions contributed to a cautious tone, with many market participants staying on the sidelines, according to Ashika Institutional Equities.
Out of 16 major sectoral indexes, 10 ended the session lower. Banking stocks were among the notable drags, led by HDFC Bank, the heaviest-weighted stock on the benchmarks. Shares of HDFC Bank dropped 2.4 per cent after its December-quarter business update showed loan growth outpacing deposit growth. Analysts at Macquarie warned that current deposit mobilization trends pose downside risks to deposit growth estimates.
The broader market showed mixed performance. Small-cap stocks rose 0.5 per cent, while mid-cap stocks slipped 0.2 per cent, reflecting selective buying in companies that reported strong quarterly updates.
Among individual gainers, real estate developer Sobha surged 5.8 per cent, while CSB Bank jumped 15.4 per cent, both buoyed by robust business updates that reinforced expectations of solid earnings.
Overall, while positive corporate signals helped cushion losses, investors remained cautious amid global uncertainty, trade tensions, and upcoming earnings, all of which are expected to drive market direction in the coming weeks.
